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The number of houses that are being repossessed has fallen to a 5-year low, say the lenders. CML or Council of Mortgage Lenders says that there were 8,200 repossessions in the third quarter of the year 2012, which is the lowest quarterly number recorded since 2007. The number of borrowers in the arrears was stable however. The repossessions have suddenly fallen in the past few years because of low interest rates as well as lenders showing some restraint with the borrowers in difficulty.
The last three-month figure from July to September was down from 8,500 in the second quarter of 2012 and lower than 9,600 repossessions that were recorded during that time of the year.
The figures show that good communication as well as effective arrear management by the borrowers, money advisers as well as the lenders has helped a lot of people who had problems in paying the monthly loan payments. This is according to Paul Smee, the director general of the CML. The repossession rates have continued to fall and it is quite clear that the lenders want to keep borrowers in their homes.
The last year forecast of the CML says that 4,500 homes will be seized this year by the mortgage lenders who did not have much patience with the borrowers that were not able to pay back their home loans.
The banks will not be absorbing the long-term arrears into their balance sheets infinitely. However, the numbers of properties that were repossessed are 26,300 in the first 9 months of the year 2012, which are 8 per cent lower than the last year’s figures.
There has been a recession in the economy for almost four years, which has led to an increase in the unemployment, rising to the current level of under 8 per cent. However, a number of factors have kept the repossessions down. There has also been a record of the low level of interest rates that the borrowers need to pay, because of the decision of the Bank of England to slash bank rates to just 0.5 per cent.
The lenders are under the pressure of not repossessing the property, unless it is the last resort. The banks need to work hard to obtain the permission of the court for seizing the borrower’s home.
Richard Sexton has warned that the number of people, who have highest arrears, which amounts to more than 10 per cent of the outstanding loans, has risen again to 29,000.